Captive power producers turn to exchanges
The historic slump in spot market electricity prices, triggered by an unprecedented fall in demand and the inadequate availability of domestic coal, has forced captive power producers to turn to exchanges for firing their end-use plants, something unseen in the Indian energy sector.
About a dozen companies, mostly in the cement, fertiliser, textile and paper sectors, are using the low spot-power prices to their advantage by shifting the energy mix of their manufacturing units. Experts say the rise in the number of captive power companies buying power from exchanges is triggered by stalled gas-based captive plants and lack of linkage coal.
“Owing to the price drop, companies are finding it economically viable to buy from the exchange. The rising participation from captive power companies has further boosted volumes, leading to higher competition and robust price discovery,” said Rajesh Mediratta, director (business development) at India Energy Exchange (IEX).
IEX is India’s largest power exchange, trading about 80 million units of power daily.
IEX says captive power companies that buying and selling power at the exchange include Hindustan Zinc, RSWM, JK Cement, Hindalco Industries and Shree Cement. “We are aware of the new trend. The reason is coal is not available under the linkage route. Coal India is supplying only 50 per cent of the needs of captive producers. Coal supply to new projects is blocked, and this a cause of concern,” said Rajiv Agrawal, secretary, Indian Captive Power Producers Association, which represents companies with about 45,000 Mw of captive capacity.